Paying for college is a top financial priority for many people, but the ever-increasing cost for higher education is beyond many people's financial reach. When you don't have savings or investments to cover the cost of your children's college education, you may need to investigate loan options.
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Federal Loans
Federal college loans are loans that the federal government funds to help students or parents pay for the cost of a college education. (Save thousands of dollars on tuition with these tricks and little-known programs, see Best Back-To-School Deals .)
Types ofFederalCollegeLoans
There are three types of federal loans: the Federal Perkins Loan , the Federal PLUS Loan and Federal Stafford Loans . To qualify for a federal loan, you will need to complete and submit a free application of student aid (FAFSA)form to the U.S. Department of Education (DoED). TheDoED uses the FAFSA form to determine your expected family contribution (EFC), or how much your family will be required to pay towards the college bill. Your school's financial aid office can help explain the FAFSA form and the different types of federal loans that you or your student may qualify for.
Federal Perkins Loan
The Perkins Loan is a need-based loan for applicants with little income and assets . More than 4,000 colleges and universities participate in the Perkins Loan program. Schools help, in part, to determine a student's financial need and how much money will be awarded to the applicant. It can be a helpful financial tool for needy students and offers several benefits to alternate financing tools including a low, fixed rate of interest; potential loan cancellation for borrowers who go into certain military, public or teaching professions upon graduation; no loan fees and a longer grace period before repayment is required. Borrowers must beU.S.citizens, permanent residents or be eligible for non-citizen status; must be enrolled at least half-time in a degree program and must maintain acceptable academic standards. Funds will be sent to the applicant or applied directly to the student's tuition. (Find out what to do when your kid is ready for higher education, but you aren't – check out Last Minute Strategies To HelpPay For College .)
FederalStaffordLoans
StaffordLoans are perhaps the most well-known federal college loans. There are four types of Stafford loans:
Stafford subsidized direct loan
Staffordunsubsidized direct loan
Staffordsubsidized Federal Family Education Loan (FFEL)
Staffordunsubsidized FFEL
